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  1. #1
    Join Date
    Mar 2012
    Hong Kong

    Default Annual Leave policy

    Hi, I am up now working to set up a Annual Leave policy for our Sydney office, we are offered 24 days per year.

    can any one willing to share with me your Annual Leave policy for reference, I would like to see what element you will normally add into the policy ?

    I heard the employee in sydney can applied a NO pay Annual leave, how many days, they can applied in a year, can Employer with the right to say NO, when they applied ?

    please advise, thanks.

  2. #2


    Hi Elaine

    Most company's align their annual leave policy to that which is prescripted in the National Employment Standards in the Fair Work Act.

    Anything above that is up to the descretion of the company, as long as it is in the benefit of the employee.

    A No Pay Annual Leave will generally require a mutual agreement between the employee and the employer, however if the employer is offering it as an employee benefit, they must have a reason for denying the request when the time comes.

  3. #3


    We do not allow lwop as we find that the employees who take this tend to be the ones that take excessive sick leave.
    One of our key policies also relates to the notice period that an employee must give before taking leave, the longer the leave the greater the notice period required.

  4. #4
    Join Date
    Apr 2012


    An Annual Leave Policy should cover:
    a) Managers have annual leave plans for their departments (put together at start of each year ideally) so leave, particularly during busy periods like Easter and Xmas is approved on the basis of "first in first served" - it may be that in some areas, there is a rotation so that all employees get the option of taking leave at those times over several years (ie it is not the same ones always getting the preferred time. You need to include that there may be some occasions when due to business requirements, some annual leave may not be approved because you require all hands on deck so to speak. But you'd couch this along the lines that every effort will be given to grant such requests.

    b) you should have something relating to accrual of leave. That is, you may want to ensure employees have the leave before they can take it; you may be okay with them taking it before it has fully accrued i.e., leave normally accrues on completion of each year of service and, in your case, your employees would accrue 2 days per month - called pro rata accrual. Depending on the type of leave system you use, some won't allow a leave application to go thru if there is insufficient leave to cover the requested leave. This bit is important because if you let employees take leave in advance (ie they've not yet accrued it), you run the risk of them leaving and owing you money.

    c) next to consider is Xmas shutdowns. If your company does this and you hire new employees towards the end of the year, they may not have been there long enough to have enough pro rata accrual needed to cover the shut. This is often where companies will permit leave without pay [LWOP] to be taken. Other times could be when you hire a new employee who has a pre-arranged holiday planned for a time not long after joining your company - he tells you at interview, you are okay for him to take the holiday but you make it clear that as he won't have been there long enough to have enough pro rata accrual to cover the leave, the balance of his time away will be LWOP.

    d) a caution on LWOP however, if employees have a leave balance, they should be using that before you approve any LWOP so your policy should be clear that LWOP may only be granted where there is a zero leave balance.

    e) Another increasingly contentious issue is excessive leave balances where people don't take their annual leave. These need to be managed and your policy should include reference to the company having a right to request employees to take their annual leave and that those with excessive balances will be taken aside and told to take it. Generally a month's notice is fair.

    As to what is 'excessive'. As a guide, the old Act used to state annual leave had to be taken within 18 months of falling due that would be a total, in your company, of 36 days so anyone with 36+ days, you'd be making sure they took it. Of course, there will be occasions when someone is saving up leave to go on big an overseas trip - where that is the case, then you have flexibility to be a bit more lenient. This issue of excessive leave can be a costly one to companies where, if not managed, your leave liability is suddenly very high. Plus when people don't take leave as it falls due but take it years later or save it up to be paid out when they retire, you are paying it out at a higher rate than it accrued at (salaries increase over the years).

    f) Something else for your organization to consider is whethere to allow cashing out of leave. Fair Work Australia [FWA] guidelines does give companies an out if you wanted to offer this. FWA does restrict this in that there must be a balance of 4 weeks of annual leave remaining after the cashing out. I'd be wording this along the lines of 'the company will consider such requests on an individual basis' but include that 4 weeks must remain after cash out. There are some companies who, however, don't permit this.

    g) One really important point ignored by many is taking leave as part of notice at resignation. Employees are asked to provide notice - generally the pay period -ie if you are fortnight paid you must give two weeks but these days, a month's notice is common for professionals and is usually stated in employment contracts. Your annual leave policy does need to include that annual leave cannot be taken as part of the notice period. There are a couple or reasons for this:

    (i) notice is there so the company has time to find a replacement and the outgoing employee can handover to the new person.

    (ii) taking annual leave as part of the notice means you have that employee on your books so that termination date is actually the last day of the annual leave, not the day he technically finished up - this means your oncost responsibilities continue to end of the annual leave.

    This area is where your managers need educating. Last year I had a senior manager who did not understand this and the employee resigned thinking he was taking annual leave as part of his notice and the manager let him take the company car. However, the company policy was clear on this point and Payroll had actually terminated that employee on his last day at work - the repercussions for that employee driving a company car and being uninsured had he had an accident was a bit scary so make sure you provide information sessions to your Managers and employees once your policy is finalised.

    One final point - do all your employees get 24 days/year? It is probably more common in Australia for only those working permanent shift work etc to receive more than stipulated by law (ie 20 days per year).

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